West Fraser Timber (WFG.TO)

Thinks the whole sector is surprisingly positive, but he doesn’t know why. When he looks at lumber over the long term, it is one of the few commodities that is basing. There is no sign of a top with WFT-T. He thinks it will go surprisingly higher.

The largest lumber stock and so the safest. The most advanced mills, so will help with operating costs. Diversified geographically in North America. Stand to generate significant cash flow when lumber prices go up, but could go sideways for a while.

Had a nice run last year and early this year. Lumber is seasonally weak over the summer, and they try to get things going before the winter comes on. We are probably still seeing signs in the US that housing starts are okay. This is probably okay.

You can expect another leg up in US housing. Lumber is still oversupplied right now. He doesn’t own any of them right now. Likes US housing, but prefers playing through US financials. He has TCN-T and HD-N also.

(Market Call Minute) Let it go for a while. Doesn’t like how lumber is acting right now. It is ahead of itself.

Looking at the dollar weighted trading price to see where most volume occurs, it is $45 even. It bounced off there a few days ago. The next support level is around $41. He would use $45 as a support level and would continue to Hold the stock right now.

He got out too early. There is a supply issue in the US. They bought 65K board feet of lumber in 2005 and then it dropped to 40k a couple of years later. There were problems in Quebec and Vancouver so now supply is short. If American demand goes up there is simply just not enough supply. He is not into the forest stocks because there are so many empty houses in the US right now.

Falling Cdn$ has been a tailwind for all the lumber companies. The bigger story is that we are in a slow improving housing market in the US. He doesn’t expect it to boom, but just generally get better. Supply is still relatively restrained in North America. There has been lots of money made already and he would encourage you to identify an exit price in the event these things roll over.

Stay the course. Directly tied to US housing recovery. The US sector is massive. There are so few attractive alternatives. It is well positioned and there is support in the fund flow into this one.

Has good earnings momentum behind it and if housing continues to be very good then there will be more for 2014. The bad news is that when you look at forest products, they are always the cheapest when they are expensive. You have to look at price to book. You should sell them when price to book is too high. It is early but soon you should he taking your profits.

Just announced a 2-for-1 stock split. Feels we are in a very positive timber cycle right now, particularly with US housing beginning to pick up. These cycles tend to go for years. You could wait for a pullback, but over the next few years, timber stocks in general are going to do very well.

All these stocks have come under some pressure. Housing stocks have pulled back as well. Feels that the US housing story is still intact. Forest products in general look fine. Sold some of his holdings of this recently, but would look to buy back into the mid to low $80s.

Biggest guy in the business. Buying on the 200 day average is probably a good idea but in the long run the timing is irrelevant. If you are a short term investor then you look out for it.

This is the season for lumber and homebuilding stocks to do well. Technically, the chart shows a rising bottom coming up towards the flat line. If it breaks above, you are looking forward to it going much higher.